Mr. George Stapleton reports
PETROTEQ ENERGY ANNOUNCES THAT UPGRADES TO ITS OIL SANDS PLANT AT ASPHALT RIDGE HAVE BEEN COMPLETED
Work to upgrade the capacity and reliability of Petroteq Energy Inc.'s oil sands plant at Asphalt Ridge has been completed, and commissioning of the POSP is now well under way. It is expected that commissioning activities will be completed this week, after which it is planned to begin operating the POSP on a single-day shift. Additional personnel will be trained during the initial operations, and, assuming the plant operates as expected, it is anticipated that the POSP will move to a two-shift operation next year.
The company has completed its evaluation of recently received mining quotations and has selected a mining contractor. The mining contract has been executed, and the mining contractor has already begun mobilizing equipment to site. After initial work to prepare the site, it is expected that mining of oil sands ore will begin this week.
George Stapleton, Petroteq's chief operating officer, commented, "We are pleased to have obtained a competitive proposal from a local, well-established mining contractor who has already begun mobilizing equipment to the site to begin mining operations, such that we should be able to restart the POSP and begin processing oil sands ore this week."
The company also intends to complete two shares-for-debt transactions, pursuant to which it will issue an aggregate of 10,069,999 common shares in satisfaction of $604,200 (U.S.) of indebtedness currently owed to two arm's-length service providers. In addition, the company intends to complete shares-for-debt transactions with its four directors, pursuant to which it will issue an aggregate of 3,959,498 common shares in satisfaction of $277,165 (U.S.) of accrued and unpaid fees owed to such directors to Nov. 30, 2020.
The company determined (with the creditors' consent) to satisfy the foregoing indebtedness with common shares in order to preserve the company's cash for use on its extraction technology in Asphalt Ridge, Utah, and for working capital. The transactions are subject to the completion and execution of definitive agreements and all necessary approvals, including from the TSX Venture Exchange. The securities issuable pursuant to the transactions will be issued in reliance on exemptions from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws, and will be issued as restricted securities (as defined in Rule 144 under the U.S. Securities Act). In addition, such securities will be subject to a Canadian four-month hold period, and in the case of the shares issuable to the directors, an exchange four-month hold period as well.
The shares-for-debt transactions with the four directors (Mr. Blyumkin, Mr. Bailey, Mr. Dennewald and Mr. Fuller) are each a related party transaction, as defined under Multilateral Instrument 61-101. The transactions are exempt from the formal valuation requirements of MI 61-101, as none of the securities of the company are listed on a stock exchange specified in Section 5.5(b) thereof. The proposed transactions are exempt from the minority shareholder approval requirements of MI 61-101, as, at the time the transactions were agreed to, neither the fair market value of the transaction, nor the fair market value of the consideration for the transaction, insofar as it involves interested parties, exceeded 25 per cent of the company's market capitalization.
Pursuant to a request from the TSX-V, the company also clarifies that the $500,000 (U.S.) principal amount convertible note issued by the company that was announced on Nov. 11, 2020, has a maturity date of Aug. 6, 2021, and has a fixed total rate of interest of 15.75 per cent (annual rate of 21 per cent), payable monthly. The net proceeds will be used by the company on its extraction technology and for working capital.
About Petroteq Energy Inc.
Petroteq Energy is a clean technology company focused on the development, implementation and licensing of a patented, environmentally safe and sustainable technology for the extraction and reclamation of heavy oil and bitumen from oil sands and minable oil deposits. Petroteq is currently focused on developing its oil sands resources at Asphalt Ridge and upgrading production capacity at its demonstration heavy oil extraction facility located near Vernal, Utah.
Petroteq believes that its technology can produce a relatively sweet heavy crude oil from deposits of oil sands at Asphalt Ridge without requiring the use of water and, therefore, without generating waste water, which would otherwise require the use of other treatment or disposal facilities that could be harmful to the environment. Petroteq's process is intended to be a more environmentally friendly extraction technology that leaves clean residual sand that can be returned to the environment without the use of tailings ponds or further remediation.
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